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EXEMPT FUNDS | Staff Reporter, China

Published: 24 Oct 13

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Only 5% of regional fund managers expect a recovery in Chinese economy: survey

A huge drop from September's 28%.

According to BofA Merrill Lynch Fund Manager Survey, the outlook for China’s economy worsened. A net 5 percent of regional fund managers expect the Chinese economy to strengthen in the coming year, down from a net 28 percent in September.

Here's more:

Investor optimism over the global economic recovery and corporate profits has been dented as the tail risk associated with the U.S. economy has escalated, though sentiment towards Europe has improved, according to the BofA Merrill Lynch Fund Manager Survey for October.

The survey taken from 4 October to 10 October showed that the number of investors believing the global economy will strengthen had fallen to a net 54 percent from a net 69 percent in September, albeit still at historically strong levels.

A net 71 percent expect the economic growth to remain “below trend” in the coming 12 months, up from a net 61 percent a month ago. Concern about U.S. fiscal tightening is now the number one tail risk for 24 percent of the panel, up from only 6 percent in September.

Investors and asset allocators have increased allocations towards global emerging market equities and have indicated in October’s survey that they see value in the region. The signals towards global emerging markets are not universally positive, however.

Asset allocators scaled back their underweight positions. A net 10 percent of the panel was underweight emerging markets equities in October, improved from a net 18 percent underweight a month ago.

On average, a net 26 percent of investors have been overweight the region.

A net 38 percent of the global respondents say that emerging markets equities are the most undervalued of all the regions – in contrast, a net 63 percent says the U.S. is the most overvalued region.

The amount of investors naming emerging markets as the region they most want to underweight continued to fall.

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